Outsourcing Time Factors, How to Examine Outsourcing Time

Outsourcing- Time Factors

Apart from the choice of vendors and pricing method, it is
important to choose your contract period well. In this
article we will examine the factors associated with time.

How Long is too Long?

This is a much-debated question. While there are no hard and
fast rules, the industry perceptions have changed over the
years. During the initial period when the outsourcing trend
started, long contracts that lasted for up to ten years were
the standard. Clients and vendors both realized later how
fast emerging technological and economic developments can
change everything. Thus both clients and vendors prefer
shorter duration contracts now.

A lot depends on what you are outsourcing to the vendor and
why. When you are looking at a transformational deal, you
need to go for longer duration contracts. This is because
such situations need time for the rewards to materialize,
for both client and vendor. On the other hand, work like
data centre support or desktop maintenance is best
structured as a short-term contract. As stated earlier,
longer contracts are generally not favored these days. If
you do have to establish long duration contracts, make sure
to build in a lot of flexibility into the arrangement.

The Transition Period

The transition period- when the new provider is just getting
a grasp on the client’s business, present capabilities and
processes, organizational culture and expectations- is
generally a time of troubled waters for both the parties.
The new vendor team has to integrate employees and assets
and get rid of wasteful expenditure and other areas of
inefficiency- and do all this while the regular work is on.
This period can last for anything from a few months to one
or two years, and you can expect productivity levels to dip.

The real problem however is that this is also the time of
making impressions. The client company is looking for the
promised gains of the deal. The other (non IT) departments
wonder why the new vendor hasn’t improved things for them,
and the in-house IT department faces an identity crisis of
sorts.

There are no simple answers to this problem. The first step
is to realize that the transition period is going to be
awkward. Anticipating the issues help both sides to have
contingency plans in place and set up realistic
expectations.

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